Jim Collin’s Advice on Building Enduring, Private Equity-Backed Companies

Many CEOs and executives struggle to balance short-term performance with the long-term resilience of their companies. In many conversations, CEOs of private equity-backed companies (and, in many cases, public companies) tell me they have struggled to balance the perspective of Jim Collins’ work on building enduring, great companies while simultaneously balancing the desire for short -term performance.

All investors and shareholders, ideally, want to have both short-term performance and long-term enduring greatness because that is the ideal investment.

The Genius of the &

I was interested in this Chief Executive article, in which Jim Collins responds to a question, at their annual leadership summit, about how CEOs balance the short-term time horizons and maximize financial returns. In perfect Jim Collins-style, he had a very well-thought-out answer:

“Your responsibility, as a CEO, is to be building the company in such a way that you’re building it for who will be the next suppliers of capital – not for those who have the privilege of investing in your Flywheel, now.”

PE-backed and public companies put a lot of pressure on short-term financial results. While that is powerful but with the right balance, you can have your cake and eat it too.

Keep the right amount of focus on what creates value for your organization, in the five- to ten-year time horizon, while also sticking to the principles of your Flywheel.

Just don’t lose sight of the long term therefore damaging or sacrificing your business for short-term results.

The Challenge

  • Whether you are private equity-backed or public company, what can you do to make sure you’re leveraging the Genius of the &, with the right amount of focus on being a long-term, enduring great company while getting your short-term results?
  • If you’re not backed by external investors, how could you benefit from their thinking and, potentially, have more focus on the short-term results? Or maybe in your case you also need to focus on being an enduring, great company.

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